German trade surplus narrows

Germany's trade surplus narrowed in January with imports rebounding after two weak months to rise at their fastest pace since last May, data from the Federal Statistics Office showed today.

The figures showed a pickup in exports as well, but may raise questions about how much trade, the traditional driver of Europe's largest economy, will contribute to an expected first quarter recovery.

Data published last week showed a sharp fall in manufacturing orders and zero growth in industrial output in January, deepening concerns about the strength of the rebound from a weak fourth quarter, which saw gross domestic product (GDP) contract by 0.6 per cent.

Leading indicators like the Ifo business climate index have pointed to a sharp rebound to start 2013, but the hard data has been mixed so far.

"So far we had disappointing numbers in January," said Juergen Michels of Citigroup. "That's why the rise in exports and also imports is a good sign that something is indeed happening at the start of the year and that the good leading indicators like Ifo are not completely wrong."

Exports pushed 1.4 per cent higher in January in seasonally adjusted terms, the biggest increase in five months. Imports, which had fallen 1.5 per cent and 3.8 per cent in the prior two months, surged 3.3 per cent, taking the trade surplus down to ¤15.7 billion from a revised ¤16.9 billion in December.

Weakness in Germany's European trading partners, many of whom have been hit hard by the euro zone debt crisis, contributed to the GDP contraction at the end of last year.

In 2013, Germany is counting on stronger demand from the United States and China, as well as a pickup in domestic consumption on the back of solid wage gains and continued low unemployment.